Twitter Shares Slide As Company Faces $250 Million FTC Fine

Twitter shares shed more than 3% of their value in after-hours trading Monday evening when the company revealed in its 10-Q, filed Monday afternoon, that it had set aside between $150 and $250 million for a FTC fine allegedly over violations of a 2011 agreement to respect users' data privacy.

A Twitter spokesperson told the Verge that the company only received word of the violation and potential fine on July 28, which is why it wasn't included in its Q2 earnings report. Twitter reported its earnings for the quarter ended in June on July 23.

Under a section of its 10-Q entitled "Legal Proceedings", Twitter revealed the allegations and potential fine, which are tied to the use of "phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019.

On July 28, 2020, the Company received a draft complaint from the Federal Trade Commission (FTC) alleging violations of the Company’s 2011 consent order with the FTC and the FTC Act. The allegations relate to the Company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019. The Company estimates that the range of probable loss in this matter is $150.0 million to $250.0 million and has recorded an accrual of $150.0 million. The accrual is included in accrued and other current liabilities in the consolidated balance sheet and in general and administrative expenses in the consolidated statements of operations. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.

The Company is also currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business. These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Litigation accruals are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable. Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure. As of June 30, 2020, except for the above referenced class actions, derivative actions and FTC matter, there was no litigation or contingency with at least a reasonable possibility of a material loss. Except for the aforementioned accrual of $150.0 million recorded in relation to the FTC matter, no other material losses were recorded during the three and six months ended June 30, 2020 and 2019 with respect to litigation or loss contingencies.

Ben and Jerry's ice cream recently decided that it would cease advertising on Twitter to take a stand against the platform's tolerance of "hate speech" (ie CEO Dorsey's unwillingness to completely cave to the demands of the looney left and bar everyone with remotely conservative views, from the centrist political hack Andrew Sullivan, to Ben Shapiro, the left's Public Enemy No. 1.

News of these latest abuses, and the government's allegations that Twitter lied about these abuses when it first admitted these "errors" last fall, might entice more corporations to cut back on ad spending, and that could impact the company's bottom line, or at least stir up enough investor anxiety to drive shares lower, making Twitter an even more attractive acquisition for another tech behemoth (since, if there's anything we've learned from Microsoft's courtship of TikTok, it's that big tech deals aren't REALLY verboten, so long as they serve a political interest).

If Microsoft can have TikTok, then why can't, say, Alphabet, be allowed to buy Twitter, perhaps by agreeing to sign a pledge promising to purge Twitter of "hate speech", perhaps by appointing a committee of SJWs to oversee it all content?

It's just the latest piece of bad news for twitter, which is still reeling from last month's embarrassing bitcoin hack.

We just recently learned that this attack was orchestrated by a 17-year-old from - where else? - Tampa, Florida.

Twitter has largely gotten a pass from the Trump Administration lately (Jack Dorsey was deemed not important enough to drag in front of Congress during last week's historic hearings involving CEOs of 4 of the biggest tech giants). The FTC and DoJ are investigating Facebook, Amazon and Google for anti-trust abuses, and it's become clear that last week's testimony did little to slacken lawmaker's thirst for the kill.